LA business owner arraigned in $1 million workers’ comp scam

The business owner allegedly underreported payroll by nearly $6 million to reduce his premiums

LA business owner arraigned in $1 million workers’ comp scam

Workers Comp

By Ryan Smith

A Los Angeles business owner has been arraigned in a $1 million workers’ compensation fraud scheme, according to the California Department of Insurance.

Marion Piggee Jr., 68, was arraigned on seven counts of insurance fraud after an investigation by the Department of Insurance found that he was allegedly underreporting employee payroll compensation by nearly $6 million in order to fraudulently reduce his business’s workers’ compensation premium by more than $1 million.

In November of 2016, the State Compensation Insurance Fund (SCIF) filed a suspected fraudulent claim with the Department of Insurance alleging potential fraud. SCIF reported that Piggee, owner of adult residential care facility Center for Behavioral Change, allegedly underreported his employee payroll in an attempt to reduce the insurance premiums owed to SCIF.

An audit for the policy period of November 01, 2014, to November 01, 2015, found that Center for Behavioral Change reported one employee, and payroll wages of just $8,035. However, the audit found wages to be $881,593 for the same policy year. It also showed that Piggee’s business had obtained workers’ compensation insurance for one facility, but did not disclose that it had acquired eight other facilities.

According to the investigation, Piggee had allegedly been underreporting company payroll from November 2009 through May 2016. The investigation also revealed that the business had 60 employees – as opposed to the one employee reported by Piggee. The business allegedly underreported payroll by $5,982,410, resulting in a premium loss to SCIF of $1,017,937.

The case is being prosecuted by the Los Angeles County District Attorney’s Office.

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